Electronic Resource
Springer
Review of industrial organization
13 (1998), S. 333-345
ISSN:
1573-7160
Keywords:
fuzzy logic and economics
;
uncertainty and information
;
trigger prices
;
collusion
Source:
Springer Online Journal Archives 1860-2000
Topics:
Economics
Notes:
Abstract Probability theory is the standard economic representation of uncertainty, although it is not always an accurate one. Fuzzy logic is an alternative representation that does not require individual beliefs regarding the explicit functional form of uncertainty. This paper applies fuzzy logic to an oligopoly trigger pricing game. The fuzzy trigger pricing game reverses the standard cyclical price war prediction; collusion-sustaining price wars are most likely to occur during times of high demand. The fuzzy model also predicts that markets with relatively volatile prices are more likely to undergo collusion-sustaining price wars. The predictions are consistent with available empirical evidence.
Type of Medium:
Electronic Resource
URL:
http://dx.doi.org/10.1023/A:1007796509603
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